Day doorstep loan firm was hit for £754m

MORE than £754m was wiped off doorstep lender Provident financial yesterday after it revealed a decision to axe 2,000 debt collectors had backfired.

The firm launched a restructuring drive in february, replacing 4,500 self-employed agents with 2,500 permanent staff.

But the firm has now told markets that this unexpectedly triggered a surge in vacancies and it struggled to find hundreds of full-time employees.

The disastrous reshuffle has led to the amount it collects from borrowers dropping, as well as triggering an exodus of customers and making it harder to sign up new ones.

Chief executive Peter Crook admitted the company had only itself to blame.

‘We didn’t get it right,’ he said. ‘The incentives that we had in place were not sufficient to retain the number of agents that we anticipated.’

Bosses said they expected profits from the consumer credit division to fall to £60m for 2017, little more than half the £115m made in the previous year. There will also be a one- off £20m charge for the restructuring work, mostly due to redundancy and retraining bills. However, Provident insisted the situation should improve from next month after all the changes are complete.

And the company said that the reshuffle will ultimately give it more control over customers, improve collections and cut costs. Crook said: ‘I am disappointed to report higher than expected operational disruption from the migration of the home credit business to a new operating model.

‘Nonetheless, the strategic rationale for the change remains strong and I am confident that it will deliver the substantial benefits previously communicated.’

Markets’ verdict on the humiliating announcement was ruthless, with the stock falling 17.6pc, or 504p, to 2361p.